Scott Brothers Limited v The Commissioners for HMRC

Permission to appeal from a tribunal’s case-management decision requires a realistic prospect of showing a material error of law. Appellate intervention is limited to legal misdirection, failure to consider a relevant matter, reliance on an irrelevant matter, irrationality or a decision outside the reasonable range. On an application to reinstate a withdrawn appeal, the tribunal assesses fairness in all the circumstances and considers the merits so far as they can conveniently and proportionately be ascertained. An arguable case or significant financial and reputational stakes do not require reinstatement; very strong merits may carry greater weight. Serious prejudice to a fair trial is not cured merely because safeguards or a costs order might be available.

Scott Brothers Limited, a company assessed to landfill tax and a wrongdoing penalty by HMRC, withdrew its appeal during the hearing after its expert had given evidence. It later applied to the First-tier Tribunal (Tax Chamber) to reinstate the appeal. The First-tier Tribunal refused reinstatement and refused permission to appeal. The Upper Tribunal had also refused permission on the papers, then reconsidered that refusal after an oral hearing requested by the company. The central question was whether the company had an arguable case that the First-tier Tribunal made a material error of law, including by reaching an irrational decision on reinstatement.

1. Permission and appellate restraint. An appeal from the First-tier Tribunal lies only on a point of law under section 11 of the Tribunals, Courts and Enforcement Act 2007. The company had to show an arguable, material error with a realistic prospect of success. Since reinstatement involved case-management discretion, the Upper Tribunal could not substitute its own view. It could intervene for a legal misdirection, a failure to consider a relevant factor, reliance on an irrelevant factor, irrationality, or a decision outside the generous range of reasonable decisions. The relevant question was whether the First-tier Tribunal’s decision could properly have been made: Paul Ward v Gagandeep Rai [2026] EWCA Civ 816.
2. Reinstatement and merits. The First-tier Tribunal correctly directed itself to assess fairness in all the circumstances, including the reasons for withdrawal, prejudice to each party and the appeal’s merits so far as they could conveniently and proportionately be assessed. The merits inquiry did not require a determination of the underlying tax dispute. The tribunal could assess whether the proposed appeal appeared very strong, very weak or between those positions. Very or overwhelmingly strong merits should receive greater weight. Here, the parties had respectable technical arguments and reasonable prospects of success. The company’s financial and reputational interest and the existence of a triable issue did not require the tribunal to give those factors particular weight or reinstate the appeal. The guidance in Pierhead Purchasing Limited v HMRC [2014] UKUT 0321 supported that approach.
3. Prejudice to a fair hearing. The First-tier Tribunal was entitled to find that reinstatement would create serious evidential prejudice to HMRC. The expert’s evidence went to the heart of the appeal. Allowing him to review his evidence and submit a supplement before a new hearing risked giving him an opportunity to repair weaknesses after the original hearing had begun. That risk was distinct from an ordinary attempt by a witness to change evidence during a trial. Possible procedural responses did not, without more, remove the prejudice, and a costs order could not compensate for prejudice to a fair trial. The Upper Tribunal also noted that the expert-prejudice reasoning concerned the original decision under challenge; it did not comment on the separate use of the word “profound” in the paper permission decision.
4. Disposition. The First-tier Tribunal’s decision was not arguably irrational or perverse. Following oral reconsideration, permission to appeal was refused.

• Upper Tribunal (Tax and Chancery Chamber): After refusing permission on the papers on 10 February 2026, the Tribunal reconsidered the refusal following an oral hearing and again refused permission to appeal: [2026] UKUT 259 (TCC) .
• First-tier Tribunal (Tax Chamber): The Tribunal refused Scott Brothers Limited’s application to reinstate its withdrawn appeal in a decision released on 12 September 2025. It refused permission to appeal on 12 December 2025.